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Korean changes won't rescue Dram market, say distributors

by Mike Magee

The three main Korean electronics giants continue to reorganise their businesses, but distributors warn this will do little to boost a memory market suffering from underlying lack of demand.

Yesterday, the three majors - Samsung, LG and Hyundai - seemed to have reached an agreement to enter a three-way swap of core operations, which would have given Samsung an effect Dram monopoly in the country.

The plan was designed to mitigate the damage done by the recent Asian currency crisis to the giants' profitability, by refocusing them on their core strenghths. But today, president Kim was reported in the 'Korean Herald' as saying that one of the three conglomerates had pulled out of the plan.

Western distributors, however, believe the Korean manoeuvrings are a sideline issue in the general memory market slump.

Alan Stanley, managing director of Dane-Elec, said: "The bottom has dropped out of the market. There's no business around at the moment."

The underlying cause, he said, was simply that PC manufacturers were not buying much memory. While prices rose at the end of last week, as the trade took in details of the Korean reshuffle, prices were now flat again.

Andrew Mackenzie, managing director of Dtech, said that news of the announcement had caused prices to briefly rally.

He said: "The worrying thing is that demand from manufacturers is not good. The decision in Korea is viewed with some cynicism. Nothing they seem to do stops the flow of product. It's like putting three fingers in a colander and attempting to stop the flow."

Mackenzie said that news that Texas Instruments was to sell its Dram technology to Micron, and that Hitachi had decided to get out of Dram manufacture altogether, would help a little by reducing the number of suppliers.

But he said: "You've got to get three or four more of these people out for this to have any effect in September or October."